Question

Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of

$1,000,

and a coupon rate of

7.2%

(annual payments). The yield to maturity on this bond when it was issued was

5.6%.

Assuming the yield to maturity remains constant, what is the price of the bond immediately before it makes its first coupon payment?

Answer #1

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